You’d think U.S. households earning $100,000 or more wouldn’t worry too much about rising inflation. After all, a six-figure income brings some advantages to the table, even in tough economic times.
Well, think again.
A new CNBC study shows affluent Americans aren’t immune from anxiety about the inflationary cloud hanging over the nation.
A whopping 96% of big earners are concerned about inflation, with 65% of six-figure-earning Americans “very concerned” over rising prices.
The study, which surveyed 1,000 U.S. adults with an annual income of $100,000 or more, also noted that a third (34%) of high-income Americans say they're “worse off financially” than they were a year earlier, while 38% are slamming on the personal-spending brakes.
Demand Among Six-Figure Earners Waning
Maybe high earners have good reason to worry.
The U.S. inflation rate is at its highest level since 1981, with no firm path to relief in sight.
According to data from a LendingClub and Pymnts report, more than half the U.S. population, nearly 150 million adults, are living paycheck to paycheck.
And it's not just average-income people in the living-on-the-edge lifestyle.
More than a third (36%) of consumers earning more than $100,000 a year reported living paycheck to paycheck in May 2022 and even one-third of Americans earning more than $250,000 annually reported themselves in that situation, according to the same report.
“Our data shows that higher-income consumers tend to be college-educated, married, and have children,” said Anuj Nayar, financial health officer at Lending Club. “They also tend to have higher financial obligations and are more likely to leverage their capital to finance their lives.”
Toss in expanding factors like a house and mortgage, kids, a car, debt obligations, and taking care of elderly relatives, and the household financial situation grows more complex, even for big six-figure earners.
“For folks in this income bracket, flexibility likely becomes more difficult,” Nayar said. “They’re more likely to be in a financial crunch”
Slivers of Light?
Some financial gurus say that wealthier Americans gnashing their teeth over high inflation are actually good news for the economy.
“Don’t confuse 'anxiety' with 'insolvency,'” said Howard Dvorkin, chairman of Debt.com and a financial counselor for nearly three decades. “I’ve noticed that the more you earn, the more you worry about the economy.”
In that regard, CNBC’s study is actually reassuring because it tells Dvorkin that six-figure Americans are already battening down the hatches. “They’re preparing for the worst while hoping for the best,” he said.
Meanwhile, those already struggling with debt might not have the resources to do anything more than cross their fingers.
“That blue-collar family making $50,000 annually sees prices rising, too,” Dvorkin added. “They can’t afford to prepare for a recession, which means 'anxiety' is also a luxury they can’t afford.”
